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Suncor, Cenovus, Imperial Oil set to report weaker fourth-quarter results

Jeff Lagerquist
Updated ·2 min read
Lower oil prices in the fourth quarter caused by ongoing recession fears and higher-than-expected non-OPEC supply are set to weigh on financial results. (AP Photo/Gregory Bull, File)
Lower oil prices in the fourth quarter caused by ongoing recession fears and higher-than-expected non-OPEC supply are set to weigh on financial results. (AP Photo/Gregory Bull, File) (The Associated Press)

Imperial Oil (IMO.TO)(IMO) is set to report financial results next Friday, a first look for investors at how the biggest players in Canada’s energy sector have fared against falling crude prices.

The price of U.S. benchmark West Texas Intermediate (CL=F) oil averaged US$78.52 per barrel in the fourth quarter, down about four per cent from the previous three months. While natural gas (NG=F) prices were modestly higher, warmer-than-normal temperatures limited demand from heating.

“We expect to see generally weaker quarter-over-quarter results for the Canadian oil and gas group due to generally softer commodity prices,” BMO Capital Markets analyst Randy Ollenberger wrote in a recent research note.

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He says ongoing recession fears and higher-than-expected non-OPEC supply weakened oil prices during the quarter.

Imperial’s results are expected before the start of trading on Feb. 2. Cenovus Energy (CVE.TO)(CVE) is set to report financial results on Feb. 15. Suncor Energy (SU.TO)(SU) has set a date of Feb. 21.

Ollenberger estimates Canadian oil and gas companies will report $8.2 billion free cash flow for the fourth quarter, down from $11.3 billion in the prior period. RBC Capital Markets is expecting $6.5 billion in free cash flow in Q4.

“Oil prices were choppy,” RBC analyst Greg Pardy wrote in a research report. “Fourth-quarter results for energy producers should reinforce trends that have been in place for some time, including an ongoing commitment to capital discipline, net debt reduction, and shareholder returns, albeit at a slower pace.”

Last week, CIBC Capital Markets lowered price targets for nearly 30 Canadian energy stocks, including Suncor, Cenovus, MEG Energy (MEG.TO), Tourmaline Oil (TOU.TO), Baytex Energy (BTE.TO)(BTE), and Crescent Point Energy (CPG.TO)(CPG).

CIBC says larger Canadian oil and gas companies could see their stocks benefit from investors looking for a “flight to safety” in 2024.

“Large-cap stocks could act as a safety trade given recessionary concerns, which could also see expanded multiples in that peer group,” analysts led by Dennis Fong wrote on Jan. 15.

Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.

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